Capital Gains tax is a mandatory column that every taxpayer needs to fill in while filing his or her annual returns. In many cases people who pay taxes do not have a clear idea of the subject. If you are interested to know how to save capital gain tax in 2011, be guided by the following tips which would help you cut down your tax amount in an effective and smart way.
Capital Gain Taxes- Brief Overview
CGT are applicable on the income one makes by selling capital properties or assets. The money earned by selling factory, office or home or even a real estate plot will be counted as income from capital assets while filing tax returns. If someone has made a significant gain from capital assets, he should take note of some simple steps to understand how to save capital gain tax in 2011.
Find Some Simple Steps to Save Money on Capital Gain Taxes
To avoid capital gain taxes or to save money, one should have a clear idea on the types of capital gains tax. Generally an asset which is not owned for a period of thirty six months or more is termed as short term assets.
- To pay less on short term capital gain tax (STCGT), one can transfer some property on the name of his or her civil partner who pays less tax. One can also keep the asset on joint names.
- A bachelor can show a different property as his original home for earning some relief on long term capital gain tax. It is also not a bad idea to purchase collectibles like antiques and paintings for saving some money on the capital gain tax bills.
- Giving some property on rent can also be a good idea to generate some income from the property without paying huge tax bills.
- Purchasing 54EC bonds might be a smart move to save money on long term bills. Yet, one should note the upper limit of purchasing these bonds. It is also wise to remember that 54EC bonds are applicable to long term capital gains only. They are not meant for the shorter ones.
To save money on capital gain taxes 2011, one should have a complete record of the assets he owns and on which this tax is applicable. Keeping yourself informed about the latest tax rules and maintaining a clean database by saving on tax legally might also help you in this regard.